Post lowered the 2005/06 production forecast by 500,000 tons to 11.5 million tons, which is
down 1.7 million tons (15 percent) from last year. Area is forecast at 3.4 million hectares for
a yield of approximately 3.4 tons per hectare. Post forecasts that the largest fall in
production will be seen in Mato Grosso where contacts believe the area decline should be
between 30 and 50 percent. Post forecasts a 35 percent fall in area to 575,000 hectares and
production down to just 1.5 million tons.
Production in Mato Grosso has been strong in recent years due to a trend of increasing yields
as a result of improved varieties and better production practices. Another important factor in
recent expansion is that costs of production in Mato Grosso are about 30 percent less than in
RS and thus a shift to the Center-West has occurred. In fact, during a recent visit with rice
producers, Post was informed that producers in southern Brazil see Mato Grosso as more of a
long-term threat than production in Argentina and Uruguay. Rice producers in Mato Grosso
benefit from lower transport costs, compared to RS and Santa Catarina, to consumption
centers in the Northeast, which is the only region in Brazil experiencing an increase in
consumption of rice. This is particularly important as Mato Grosso depends on shipping
outside the state with only 200,000 tons of the state’s 2.2 million tons of production
consumed in the state. Furthermore, rice industry investment in mills and infrastructure is
increasing with about R$50 million invested last year. As a result, milling capacity in Mato
Grosso has increased from 900,000 tons in 2001 to over 1.7 million tons in 2005.